Complete Guide to Heat Pump Hot Water Rebates in Australia (2026)

STCs are the foundation rebate available to all Australians. They are part of the federal Renewable Energy Target and apply to heat pump hot water systems because they are classified as "solar water heaters" under the scheme (they harvest ambient energy from the air).

How they work: When you install an eligible heat pump hot water system, your installation creates a number of STCs based on the system's efficiency, your location (deeming period), and the size of the system. These certificates have monetary value and can be sold on the open market.

In practice: Your installer handles the STCs. They will either assign the STCs to themselves (giving you an upfront discount on the install price) or sell them on your behalf. Almost all installers use the first approach: they deduct the estimated STC value from your quote, so you pay less upfront.

Current value: The STC discount is not a fixed figure. It typically lands between $400 and $1,200 depending on your system's capacity, your climate/postcode zone, and the STC market price. Larger systems and colder zones generate more certificates. Installations in regional and northern areas may generate slightly more due to zone factors.

The discount steps down every year. The number of certificates a heat pump earns is based on a deeming period that reduces by one year every 1 January (the 2026 deeming period is 5 years), and the small-scale scheme is legislated to end in 2030. That means the same system installed next year will generally earn a smaller STC discount than it does today, so installing sooner locks in more value.

Eligibility requirements:

• The system must be on the Clean Energy Regulator's list of approved products (generally air source heat pumps of around 425L or less).
• The installation must be done by an accredited installer.
• It must be a new installation (not second-hand equipment).
• One claim per premises for hot water.

STC value fluctuates based on market supply and demand, and the certificate count steps down each January. Your installer's quote should clearly state the STC discount applied.

Victoria has the most generous combined rebate package for heat pump hot water in Australia.

Solar Victoria Hot Water Rebate: 50% of purchase price, up to $1,000 (up to $1,400 for eligible Australian-made systems)

• Amount: 50% of the purchase price up to $1,000, or up to $1,400 for an eligible locally made heat pump or solar hot water system. Applied as a point-of-sale discount through an accredited retailer.
• Eligibility: Victorian owner-occupiers of an existing property valued under $3 million, with combined household taxable income under $150,000 (reduced from $210,000 on 1 July 2026), replacing a system that is at least 3 years old, where the address has not previously been rebated under Solar Homes.
• Process: The rebate is delivered through an accredited retailer as a discount on your invoice. Confirm your eligibility and paperwork before installation.
• One rebate per property at an address not previously rebated under the Solar Homes program.

VEU (Victorian Energy Upgrades) Discount: up to about $630

• How it works: Your installer creates Victorian Energy Efficiency Certificates (VEECs) based on the energy savings your new heat pump will deliver compared to your old system, and passes the value through as a discount.
• Value: A variable point-of-sale discount, currently up to about $630 (roughly $200-$630), depending on what you are replacing and the certificate spot price. It is not a fixed rebate.
• Applied at point of sale: The installer deducts the value from your invoice. You do not need to apply separately.
• Key requirement: Your installer must be a VEU-accredited provider. Not all plumbers are. Ask specifically about VEU accreditation when getting quotes.

Total Victorian rebate stack: Federal STCs ($400-$1,200) + Solar Victoria (up to $1,000, or up to $1,400 Australian-made) + VEU (up to about $630). For a mid-range system this commonly adds up to around $2,000-$2,700, and can reach roughly $3,200 where the highest tiers all apply to an eligible Australian-made system.

NSW operates the Energy Savings Scheme (ESS), which provides a Hot Water Upgrade incentive for switching to a heat pump.

NSW ESS Hot Water Upgrade incentive: up to $640 (electric) or up to $330 (gas)

• How it works: Similar to Victoria's VEU. Your installer creates Energy Savings Certificates based on the estimated energy savings of your new heat pump, and passes the value through as a point-of-sale discount.
• Value: Up to $640 to replace an existing electric water heater with a heat pump, or up to $330 to replace a gas water heater. The exact amount varies by installer, model, and location. Both pathways remain available after 1 July 2026.
• Applied at point of sale: The installer deducts the value from your invoice.
• Installer requirement: Must be an Accredited Certificate Provider (ACP) under the ESS. Check with your installer.

Total NSW rebate stack: Federal STCs ($400-$1,200) + ESS (up to $640 electric / up to $330 gas), commonly totalling around $800 to $1,800 depending on your system and what you are replacing.

NSW does not currently have a direct cash rebate equivalent to Victoria's Solar Victoria program. However, some local councils and community energy programs offer additional incentives. Check with your local council for any available programs.

The ACT takes a different approach, offering a low-interest loan rather than a direct cash rebate.

Sustainable Household Scheme: low-interest loans of $2,000 to $20,000

• How it works: The ACT Government provides low-interest loans to help households buy eligible energy-efficient products, including heat pump hot water systems. This is a loan, not a grant, and it is not interest-free.
• Loan amount: $2,000 to $20,000 per household. The $20,000 maximum applies to new applicants approved on or after 1 July 2026; applications approved before that date were capped at $15,000.
• Rate and term: 3% fixed interest, repaid over up to 10 years, with no upfront or establishment fees.
• Eligibility: ACT residential property owners and some renters (with landlord consent).
• Process: Apply through the Sustainable Household Scheme website. Choose from a list of approved suppliers.

Total ACT benefit: Federal STCs ($400-$1,200) at point of sale, plus a 3% fixed-rate loan for the remainder that spreads the cost over up to 10 years.

The ACT also has among the greenest electricity grids in Australia (a 100% renewable electricity commitment), meaning a heat pump in the ACT has near-zero operational emissions.

South Australia's Retailer Energy Productivity Scheme (REPS) provides an incentive, but the amount is not fixed.

REPS heat pump activity: variable retailer discount, no fixed amount

• How it works: Energy retailers are required to deliver energy productivity activities to their customers. Installing a heat pump hot water system qualifies as an eligible activity, delivered as a variable discount or subsidised install through an accredited retailer or provider.
• Value: There is no set or published government rebate figure. The saving depends on the retailer and the specific offer. A minimum co-payment of $33 including GST may apply, and this is often waived for concession-card or priority-group households.
• How to access: Contact your energy retailer or ask your heat pump installer whether they can facilitate a REPS-backed offer.

Total SA rebate stack: Federal STCs ($400-$1,200) plus a variable REPS discount from your retailer. Because the REPS amount is not fixed, always ask for the discount to be shown as a line item on your quote.

SA homeowners also benefit from high solar irradiance, making the combination of rooftop solar and a heat pump particularly effective. Running your heat pump on solar self-consumption can reduce hot water costs to near-zero.

Queensland: QLD does not have a current state heat pump rebate. The Climate Smart Energy Savers program (which paid $800 standard, or $1,000 for low-income households) is now closed, so the federal STC discount is the incentive that remains (typically in the order of $800-$1,200 for a Queensland system). Some QLD energy retailers offer voluntary incentives for switching to efficient electric hot water, so it is worth checking with your retailer.

Western Australia: WA has no state heat pump rebate and relies on the federal STC discount as the primary incentive (around $800-$1,200 for a typical Perth system). Some WA electricity retailers offer off-peak tariff incentives that further reduce heat pump running costs.

Tasmania: Tasmania has no current cash rebate. The interest-free Energy Saver Loan Scheme ($500-$10,000 at 0%, which covered heat pump hot water) closed on 1 September 2025 and has not reopened. The federal STC discount remains available (typically around $400-$700 in Tasmania). Tasmania's relatively low electricity prices, among the lowest in Australia thanks to hydro generation, make heat pump running costs particularly competitive.

For all three states, the federal STC scheme provides meaningful savings, and the running cost advantages of heat pumps over gas are strong regardless of state-specific rebates.

Homeowners regularly leave money on the table when claiming heat pump rebates. Here are the most common mistakes:

1. Not checking VEU/ESS accreditation: Your installer must be accredited under the relevant certificate scheme (VEU in VIC, ESS in NSW) to apply certificate discounts. A non-accredited installer means you miss out on $400-$1,000 in savings. Always ask about accreditation before accepting a quote.
2. Applying for Solar Victoria after installation: The Solar Victoria rebate must be approved before installation begins. If you install first and apply later, you will be rejected.
3. Not assigning STCs: If you forget to assign your STCs to the installer at the time of installation, you can still sell them yourself through the STC market, but this is more complex and you may receive less value. Make sure your contract explicitly mentions STC assignment and the discount amount.
4. Choosing a non-eligible system: Not all heat pump hot water systems qualify for STCs. The system must be on the Clean Energy Regulator's approved product list. Stick to major brands (Rheem, Sanden, Reclaim, iStore, Stiebel Eltron) and you will be fine.
5. Missing income/property thresholds: The Solar Victoria rebate has income and property value caps. From 1 July 2026 the combined household taxable income cap dropped to $150,000 (previously $210,000), and the property value cap is $3M. If you are close to these thresholds, check your eligibility carefully before counting on the rebate in your budget.
6. Not getting multiple quotes: Installers apply rebates differently. Some absorb the STC/VEU value into their margin rather than passing the full discount through. Getting 2-3 quotes lets you see who is passing through the maximum rebate value.